Canada: The Nova Scotia RFP Process And PPA For IPPs

Last Updated: June 15 2012
Article by Sven Walker

Nova Scotia's Renewable Energy Plan, brought into effect by the Government of Nova Scotia in 2010, requires that by 2015, renewable energy account for 25% of the energy supply. A further target of 40% by 2020 has been set. As part of this goal, Independent Power Producers (IPPs) will procure 300 GWh under a Power Purchase Agreement (PPA). IPPs will be awarded PPAs through the Request for Proposals (RFP) process, which will be overseen by the Renewable Electricity Administrator (REA). The REA is Power Advisory LLC, appointed by the government in July 2011.

THE REQUEST FOR PROPOSALS (RFP) PROCESS

A draft Request for Proposals (RPF) Process was issued by the REA on April 9, 2012.

Proposals will be first reviewed to ensure that they satisfy the Mandatory Requirements. They will then be evaluated on a points system to establish a points-score. Projects will then proceed to the price evaluation stage where each Proposal's Evaluated Proposal Price will be calculated, according to which Projects will be ranked.

Mandatory Requirements:

The Proponent Must

  1. Have submitted a Notice of Intent to Bid and a non-refundable Notice of Intent to Bid Fee of $5,750 by November 22, 2011.
  2. Be an Independent Power Producer, as defined under N.S. Reg 155/2010: A renewable low-impact electricity generator i) of which no more that 49% of the voting securities are held by a public utility in combination with any affiliate of the public utility, and ii) that sells electricity a) in Nova Scotia to public utilities for retail sales to the utilities' customers, or b) for export outside of Nova Scotia.
  3. Agree to be registered to do business in Nova Scotia prior to the Project being interconnected to the transmission system.

The Project Must

  1. Be a Renewable Low-Impact Electricity Generation Facility as defined under the renewable Electricity Regulations (N.S. Reg. 155/2010).
  2. Be a New Build or, under certain circumstances, an Expansion.
  3. Utilize a Proven Electricity Generating Technology which is readily available.
  4. Be located in Nova Scotia and electrically connected to the Nova Scotia electricity transmission grid.
  5. Have a Name Plate Capacity of between 4 MW and 80 MW.

Commercial Operation Date

The Project must have a Commercial Operation Date on or before January 1, 2015.

Project Site Control

The Proponent or an affiliate must have a lease or an option for the lease, or own or have an option to own, the lands for the Project Site for the full Contract Term.

Environmental Assessment

The Proponent must declare whether the Project is a Class I or Class II undertaking as defined under the Environmental Assessment Regulations made under Section 49 of the Environment Act and demonstrate that it has made efforts to secure any necessary Environmental Approvals.

Interconnection Request

Interconnection Feasibility Study: The Proponent must provide a copy of an Interconnection Feasibility Study report from the Nova Scotia Power System Operator (NSPSO) for the Project and indicate whether the Proposal has selected Energy Resource Interconnection Service (ERIS), Network Resource Interconnection Service (NRIS) or both as part of the GIP Interconnection Request process.

Proponents were required to initiate an Interconnection Request under the process provided for by the Nova Scotia Power Incorporated (NSPI) Generator Interconnection Procedures (GIP) by November 21, 2011 in view of the Interconnection Feasibility Study to be performed by the NSPSO.

Locational Losses Report: Proponents must submit a Locational Losses Report that will estimate the locational losses for the Project. Proponents must request the Locational Losses Report from the NSPSO at least 30 business days prior to the Proposal Submission Deadline.

Proponent Experience

The Proponent or a Project Team member must demonstrate experience in successfully planning, developing, financing, constructing, and operating one or more renewable energy facilities.

Provincial Content Plan

The Proponent must provide a Provincial Content Plan for the Project describing the sourcing of all major equipment and on-site labour from Nova Scotia. In the event of a tie between Proposals, the Provincial Content Plan may, in certain circumstances, be used as a tie breaker, with the Proponent having the higher proportion of provincial content relative to Total Project Cost selected.

Evaluation Criteria:

The Proponents will be evaluated on a points-system, with a total of 100 points available. Proposals with a Name Plate Capacity of 50 MW or less must achieve a minimum total point score of 60 to proceed; proposals with a Name Plate Capacity of greater than 50 MW must achieve a minimum total point score of 80 to proceed. Proposals are assessed based on the following six criteria:

1. Network Upgrade Requirements (40 Points)

Points will be awarded based on the proposed Point of Interconnection of the Project. The Point of Interconnection may be located in one of four zones into which the province has been divided. The zone in which the Point of Interconnection is located will determine the points awarded.

Projects in zones 3 and 4 are only rewarded points if Proponents have selected either the Congestion Management Alternative (for projects with a project size equal to or less than 20 MW), or have chosen to pursue the Forgo Transmission Credits alternative.

2. Project Team Experience (15 Points)

Proponents will be assessed based on the experience of the Proponent's Project Team in developing, financing, and constructing projects substantially similar to the proposed Project. Where Project Team experience is provided primarily by technical, financial or legal advisors, Proponents will receive lower scores.

3. Financial Assessment (15 Points)

Proponents will be assessed based on a financial plan submitted by the Proponent which indicates the firmness of the Proponent's funding commitments. The Proponent must demonstrate the capability to fund the project through internally generated or available funds.

4. Resource Assessment (10 Points)

Proponents will be assessed based on the level of uncertainty associated with the renewable energy resource upon which the Project output estimate is based. Wind generation facilities will be assessed based on meteorological data.

5. Environmental Assessment (10 Points)

Projects will be assessed based on the Proponent's progress in securing environmental assessment approvals for the Project.

6. Community Acceptance (10 Points)

Projects will be assessed based on community engagement to date, planned community acceptance, and community engagement experience on other projects.

The Power Purchase Agreement (PPA)

On May 25, 2012 the Nova Scotia Utility and Review Board approved the Renewable Electricity Administrator's (REA) Standard Form Power Purchase Agreement (PPA) for proposals for 300 GWh. The PPA is a standard contract which will be entered into between Nova Scotia Power Incorporated (the Buyer) and the Independent Power Producer (the Seller)..

The REA indicated on May 3 on the nsrenewables.ca website that it expects that proposals will be due no sooner than June 15.

PPA (compliance filing of May 10)

Facility Interconnection

If the Interconnection System Impact Study estimates Network Upgrade Costs in excess of the Threshold Amount (which is determined according to the zone in which the Point of Interconnection is located), parties agree to negotiate and consider amendments to the Project or PPA.

Congestion Management Alternative: If the Project has selected the Congestion Management Alternative, the Seller must select both the Energy Resource Interconnection Service (ERIS) and the Network Resource Interconnection Service (NRIS) in its Interconnection Request. The Seller may be obligated to proceed with ERIS if the Interconnection System Impact Study indicates that Network Upgrade Costs exceed the Threshold Amount ($25.90/MWh). The Seller also gives up any right to compensation for curtailment by selecting this alternative.

Forgo Transmission Credits Alternative: Proponents selecting this alternative are required to pay the cost of required Network Upgrades.

Scheduled Date for Commercial Operation

If Commercial Operation is delayed (other than by reason of Force Majeure), the Seller will be liable to NSPI for liquidated damages in the amount of $150/MW for every day of delay up to 365 days. If Commercial Operation has not occurred 12 months after the Schedule Operation Date, NSPI may end the PPA and NSPI may demand an Early Termination Payment.

Renewable Energy Credits

The Seller assigns all interest in Renewable Energy Credits purchased by NSPI to NSPI.

Delivery and Acceptance of Energy

If Net Output of the Facility during any Contract Year (excluding the first year) is less than 80% of the Energy Bid, the Seller will be liable to NSPI for liquidated damages. If Net Output of the Facility between the beginning of the second and the end of the fifth Contract Year is less than 80% of three times the Energy Bid during a consecutive period of 36 months, the Seller may restate the Energy Bid and pay liquidated damages, or demonstrate, amongst other things, that the Facility was designed and constructed to maintain the New Output of the Energy Bid. During the first Contract Year the Seller may restate the Energy Bid to no less than 90% of the Energy Bid together with liquidated damages.

NSPI must purchase the entire Net Output of the Facility except where the Facility is not operated in a manner consistent with Good Utility Practice or the Generator Interconnection Agreement. The Seller may claim the price that would have been payable by NSPI for such Net Output.

Curtailment

The Seller is not entitled to any claim for any curtailment effected pursuant to the Generator Interconnection Agreement except where:

  1. The Seller has not selected the Compensation Management Alternative and the Seller's facility is available for dispatch as part of the day ahead or intraday (three hours) and curtailment is due to dispatch instructions for the day ahead or intraday (three or four hours ahead) scheduling by NSPI, or
  2. The Seller has not selected the Compensation Management Alternative and the Seller has selected NRIS and the curtailment is due to transmission limits to manage congestion.

In the above circumstances, the Seller may claim compensation in an amount equal to the Energy Rate multiplied by the difference between the Expected Output and the actual Net Output for the hour.

The Generator Interconnection Agreement states that NSPI may require curtailment for as long as reasonably necessary if delivery of electricity could adversely affect NSPI's ability to safely and reliably operate and maintain the Transmission System.

Payment and Costs

The NSPI will pay the Seller the Energy Rate specified by the Seller except: 1) during the Interim Period (the period between the interconnection of the Facility to the System but prior to the Commercial Operation Date); 2) for the generation of "excess energy" (1.20 times the Energy Bid); 3) where the Seller fails to maintain Electricity Standard Approval of the Facility. In those three circumstances, payments will be the lower of the Energy Rate or the Incremental Energy Rate (the cost to NSPI of generating or purchasing energy from sources other than the Facility).

The PPA does not apply to payments of Ancillary Services from the facility.

Performance Security

The Seller must provide Performance Security in the amount of $25,000/MW as Pre-Commercial Operation Date (COD) Security within 10 days of executing the PPA. The pre-COD Security will be returned to the Seller upon request following Commercial Operation. The Seller must provide and maintain Post COD Security in the amount of $20,000/MW following the COD for the length of the Term. The NSPI may draw upon the Performance Security if the Seller breaches its obligations. In that case, the Seller must provide replacement Performance Security.

Term

The term of the PPA is 20 years from the Commercial Operation Date (COD). Even if the Facility has not achieved Commercial Operation by the Scheduled COD, the term will expire 20 years after the Scheduled COD, with the exception of delays caused by a Force Majeure. Where there is a Force Majeure, the Scheduled COD and the Term will be extended by the length of delay caused by the Force Majeure. If there is a Force Majeure event lasting for more than 12 months prior to Commercial Operation, either party may end the PPA without penalty.

Force Majeure

If either party is unable to fulfill certain obligations because of a Force Majeure event, the party is excused from the performance of those obligations for the length of the force majeure, provided that, amongst other things, the affected party has tried to mitigate the effects of the Force Majeure. No obligations to make payments that are owed are excused. If there is a Force Majeure event lasting for a total of 30 months in a 60 month consecutive period following Commercial Operation, either party may end the PPA without penalty.

Project Lender Provisions

Sellers may, subject to certain conditions, enter into a Project Lender's Security Agreement. If a Project Lender's Security Agreement remains outstanding, NSPI may not terminate the PPA on grounds of Seller default unless notice has been given to the Project Lender, and the Project Lender has had the opportunity to cure the default on behalf of the Seller. A Project Lender may acquire the Seller's interest in the Project, at which point the Project Lender becomes liable for the Seller's obligations. Upon default of the Seller, the Project Lender has the opportunity to enter into a new agreement.

Change in Law

In the case of a Change in Law the Parties will negotiate to amend the PPA to reflect the expected economics of the Seller prior to the Change in Law.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Sven Walker
 
In association with
Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions